Reference no: EM132758324
Question - Prepare the journal entries required in an Internal Service Fund to record the following transactions.
1. Purchased a building on July 1 by paying $100,000 down and borrowing $350,000 on a 6%, 10-year mortgage. Assume annual mortgage payments are due each July 1, beginning next year.
2. Purchased materials and supplies on account, $58,000.
3. Paid employee salaries, $120,000. Accrued salaries at year end were $13,000. Accrued salaries at the beginning of the year were $9,000.
4. Billed General Fund departments $400,000 for services provided to those departments. Billings to the Enterprise Fund totaled $30,000. All but 10% of these billings were collected by year end. The remaining 10% is not expected to be collected from the other funds until the second quarter of the next fiscal year.
5. Materials on hand at year end have a cost of $4,000. The beginning of the year inventory was $6,000.
6. Make any appropriate year end (December 31) adjustments. The useful life of the building is 20 years.
7. July 1, Year 2-Paid the annual mortgage payment of $47,555.
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